In a major development, the Competition Commission of Pakistan (CCP) has decided to regulate real estate sector, which is estimated to have a value of around Rs 7 trillion, covering private housing schemes and societies operating without adequate monitoring and regulations. According to a Business Recorder exclusive, the CCP will "fully regulate" the real estate sector. Pakistan's real estate sector remains practically unregulated with little or no regulatory check on the private housing schemes in which millions of Pakistanis invest their lifetime savings. The CCP has pointed out that the country is facing a shortage of around 9 million housing units thus offering great potential for investment in the real estate sector. Big investors are therefore buying mostly peri-urban agricultural land by paying nominal amounts to owners to announce housing schemes. However, due to lack of an effective regulatory oversight, there is no check on the authenticity of these housing schemes. Small investors get lured by their 'deceptive' marketing campaigns. In this regard, the CCP has recently concluded open hearings on the real estate sector. The representatives of real estate associations, builders, developers, marketers, regulators, ministries and other relevant government offices, and consumers are said to have attended these hearings. The participants reportedly talked about 'deceptive' marketing practices by developers and marketing companies. They also highlighted other issues such as overbooking of plots, delays in giving possession of plots, and approvals - or lack thereof - by the relevant authorities for various housing schemes and societies. The marketers and developers have plausibly argued that because of no regulatory oversight of the real estate sector and no effective monitoring of real estate development projects, all stakeholders have been suffering. They strongly recommended that there should be independent and effective regulation of this sector.
Although the CCP claims that the law empowers it to regulate or begin to control economic sectors, including real estate, with significant potential for growth, it is not known whether or not its mandate allows it to regulate real estate sector at all. The law from where the CCP derives its mandate essentially stipulates the following:
"The Competition Act, 2010 (CA '10) is a state of the art modern law which gives the Competition Commission of Pakistan legal and investigative instruments and powers to engender free competition in all spheres of commercial and economic activity, enhance economic efficiency, and to protect consumers from anticompetitive behaviour. The Act applies to all undertakings in Pakistan regardless of their public or private ownership and to all actions or matters that can affect competition in Pakistan. Although essentially an enabling law, it briefly sets out procedures relating to review of mergers and acquisitions, enquiries, imposition of penalties, grant of leniency and other essential aspects of law enforcement. Briefly, the law prohibits situations that tend to lessen, distort, or eliminate competition such as actions constituting an abuse of market dominance, competition restricting agreements, and deceptive marketing practices... ." The law, per se, does not authorize the CCP to regulate or exercise control on this sector despite its noble intentions that have translated into providing a platform to all stakeholders to discuss the issues pertaining to the real estate sector. Given the overall size and the incidence of corrupt practices in this sector, what is actually needed is the formation of an authority that is responsible for overseeing transactions and providing clarity on a number of issues related to this sector. This authority should, through legislation, have the power to regulate the relationship between all contracting parties. The proposed authority must also deal with issues of planning, organizing and evaluating operations in this sector with a view to handling the organisation and development of real estate activities and monitoring projects from a financial and technical perspective to protect investors.